A key business activity indicator for the eurozone has declined for a second month running, the compilers of the purchasing managers’ index (PMI) reported on Monday.
The index, covering output of both manufacturing and services, fell from 53.5 in May to 52.8, dropping further from April’s 35-month high, Markit reported in London.
Growth remained robust in Germany despite weakening slightly, whereas France’s downturn deepened.
“The data highlights the continued divergence between the region’s two largest economies,” said Jessica Hinds of Capital Economics.
“Although the German composite PMI declined to its lowest level in eight months, it still points to a healthy pace of growth. By contrast, the French economy may fail to improve on the zero growth in recorded in Q1,” she added.
Markit said that, elsewhere across the region, growth was the strongest since August 2007 and termed this a “strengthening periphery.” The PMI is seen as an up-to-the-minute guide to the “real” economy, since it tracks how industry and services buy the inputs they need do produce.
“A concern is that a second consecutive monthly fall in the index signals that the eurozone recovery is losing momentum. Hopefully the recent stimulus measures from the ECB will help revive growth again,” said Chris Williamson, Markit’s chief economist.
This month, the European Central Bank cut interest rates in a bid to give the weak eurozone a fillip.
“The further weakening of the PMI vindicates the ECB’s recent decision to implement further monetary easing and will keep fears of a Japanification of Europe firmly alive,” he said, alluding to fears of a combination of stagnation and deflation that held back the Japanese economy for the better part of this century’s first decade.